India's annual food inflation rate fell for the second successive week to 7.61 per cent for the week ended June 25, on the back of cheaper price of cereals, vegetables, fruits and rice. It remained in single digit for the 15th consecutive week.
Advances in monsoon improve prospects of further decline, at least in food prices even as concerns over the headline inflation remain due to rising global fuel and commodity prices.
Annual inflation rate of food article prices, as measured by the wholesale price index, or WPI, (with base year 2004-05) for the week ended June 25 fell to 7.61 per cent from 7.78 in the preceding week.
Percentage of inflation for the corresponding week in the preceding year was 19.88 per cent. The 52-week average inflation for the week ended June 25 was 12.80 per cent, according to data released by the Ministry of Commerce & Industry.
Annual percentage of inflation for "Non-Food Articles" declined to 17.69 per cent from 17.91 in the preceding week. The 52-week average inflation for the week ended June 25 was 23.82 per cent.
Primary articles
Annual rate of inflation for the week ended June 25 was 11.56 per cent, down marginally from the last week's level of 11.84 per cent. It was 19.23 per cent for the corresponding week of the preceding year. The 52-week average inflation for the week was 15.88 per cent, the data revealed.
Index for this group, with a weightage of 20.12 per cent, increased by 0.20 per cent from the previous week's level.
These groups and items showed variations:-
Higher prices of coffee, mutton, gram, fruits and vegetables, jowar and musur pushed up the index for "Food Articles" by 0.53 per cent. However, the prices of ragi, fish-marine, moong, condiments and spices, bajra, egg and urad declined.
Index for "Non-Food Articles" declined by 0.44 per cent, due to the lower prices of raw jute, flowers, raw rubber, while those of linseed, safflower, gingellyseed, raw silk, fodder and gaurseed, sunflower and soyabean moved up.
Index for "Minerals" fell by 0.41 per cent due to lower prices of crude petroleum.
Fuel & Power
Annual rate of inflation under this category for the week ended June 25 dropped to 12.67 per cent from the previous week's level of 12.98 per cent. The 52-week average inflation for the week was 11.98 per cent, the data said.
Index for this major group carrying a weightage of 14.91 per cent rose by 3.81 per cent on higher prices of kerosene, LPG and high speed diesel, whereas those of bitumen and furnace oil, naphtha dropped.
Reserve Bank of India (RBI) Governor Duvvuri Subbarao said on Tuesday that the data on inflation and industrial output is flawed, as it does not reflect the correct picture and could "potentially mislead policy calculations".
On inflation data, Subbarao said the headline inflation index based on the wholesale prices was also not a true reflection of the impact of price rise on the common people. He said the RBI should be guided more by the consumer price index (CPI) than the wholesale price index (WPI in capturing market dynamics and arriving at a more realistic inflation forecast.
The apex bank's policy decisions are generally guided by the inflation based on wholesale price index. The wholesale price index (WPI) is based on 2004-05 prices and tracks 555 items.
Mentioning about the macroeconomic challenges faced by the Indian economy, the Finance Minister Mukherjee said that India's major challenge in the short-term was inflation, which had implications for sustaining high growth momentum in the Indian economy. He said the inflationary pressures persist both from higher global commodity prices and domestic structural demand-supply imbalances in several commodities.
The management of inflationary pressures in the medium-term is critically dependent on an improvement in the supply response of agriculture to the expanding domestic demand and in the short-term by take steps to moderate aggregate demand, he added.
Mukherjee said the monetary policy had been gradually tightened while at the same time, new initiatives were announced in the Union Budget 2011-12 to address some of the bottlenecks in the food supply chain that were behind the inflationary spikes in 2010-11.
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